Castle Biosciences, Inc. (NASDAQ:CSTL) Reported Earnings Last Week And Analysts Are Already Upgrading Their Estimates
Castle Biosciences, Inc. (NASDAQ:CSTL) investors will be delighted, with the company turning in some strong numbers with its latest results. Results overall were credible, with revenues arriving 2.3% better than analyst forecasts at US$220m. Higher revenues also resulted in lower statutory losses, which were US$2.14 per share, some 2.3% smaller than the analysts expected. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Check out our latest analysis for Castle Biosciences
Taking into account the latest results, the most recent consensus for Castle Biosciences from eight analysts is for revenues of US$237.3m in 2024. If met, it would imply a modest 8.0% increase on its revenue over the past 12 months. Losses are expected to increase slightly, to US$2.14 per share. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$217.2m and losses of US$2.88 per share in 2024. So it seems there's been a definite increase in optimism about Castle Biosciences' future following the latest consensus numbers, with a very favorable reduction to the loss per share forecasts in particular.
There was no major change to the consensus price target of US$32.63, perhaps suggesting that the analysts remain concerned about ongoing losses despite the improved earnings and revenue outlook. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. The most optimistic Castle Biosciences analyst has a price target of US$37.00 per share, while the most pessimistic values it at US$25.00. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.
Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that Castle Biosciences' revenue growth is expected to slow, with the forecast 8.0% annualised growth rate until the end of 2024 being well below the historical 36% p.a. growth over the last five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 6.8% annually. So it's pretty clear that, while Castle Biosciences' revenue growth is expected to slow, it's expected to grow roughly in line with the industry.
The Bottom Line
The most obvious conclusion is that the analysts made no changes to their forecasts for a loss next year. They also upgraded their revenue forecasts, although the latest estimates suggest that Castle Biosciences will grow in line with the overall industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Castle Biosciences analysts - going out to 2026, and you can see them free on our platform here.
Don't forget that there may still be risks. For instance, we've identified 3 warning signs for Castle Biosciences that you should be aware of.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
